Let’s say you have a job already, but you are looking for something better and more stable. You stumble across a similar job with one of the most prestigious firms in your industry. You end up landing the job but then find out (because you have been following AF rules about not asking about compensation until the end) they are only paying half of what you are making now and less than a quarter of what you hope to make long-term. The upside is that a) it would be a great name on your resume and b) the firm is one of the few in your industry that is growing. The downside would be a) income, which is not enough to support your expenses, let alone generate any savings, and b) you have to put up with that income for several years before you can jump to another firm so that you don’t look like a job hopper. What would you do – look for something better in this sh!tty job market or take this job and live like akanska for a few years?
BTW also assume that staying at your current job for the long-term is not an option.
50% hair cut? Why such a disparity on pay? I understand the draw to the new position but 50%! If you are miserable at your current gig and truly believe the pay decrease will be made up for by opportunity and experience at the new firm then it might be worth it.
JohnThainsLimoDriver Wrote: ------------------------------------------------------- > Let’s say you have a job already, but you are > looking for something better and more stable. You > stumble across a similar job with one of the most > prestigious firms in your industry. You end up > landing the job but then find out (because you > have been following AF rules about not asking > about compensation until the end) they are only > paying half of what you are making now and less > than a quarter of what you hope to make long-term. > The upside is that a) it would be a great name on > your resume and b) the firm is one of the few in > your industry that is growing. The downside would > be a) income, which is not enough to support your > expenses, let alone generate any savings, and b) > you have to put up with that income for several > years before you can jump to another firm so that > you don’t look like a job hopper. What would you > do – look for something better in this sh!tty job > market or take this job and live like akanska for > a few years? Wow! Its like you took words from my hand. I am in a very similar position. The difference is that I think the cmpensation would be ok but cost of living would set me back. I want to get the new job because it would look good on my resume. ANother issue I have is that the potential employer indicated they are looking for at least a 2-year commitment. I wonder what that means? It could mean signing a contract that says I will have to give back bonuses etc if i leave before 2 years. If income is that low, I’d say skip the opportunity and look for others. As for myself, I think I am able to absorb cost of living adjustment to get the exposure. But I dont think i will be willing to sign any stringent contracts.
I’m not sure why the comp is so low but I suspect it’s a combination of a) the prestige of the firm makes them able to pay less and still attract talent b) not in New York (although within commuting distance) c) in my firm I’m the only person who can do my job, while in their firm they have dozens of people who can do my job d) probably a lot of people out there who would work for even less than what they are offering right now e) they specialize more in consulting than in actual investing, ie. if a pension or endowment needed investment advice they would come to these guys. I think their consulting fees (flat rate) dominate their hedge fund fees (2/20). I’m not necessarily miserable at my current job but I am not very confident my job (or firm) will exist by the end of the year unless asset flows in the hedge fund industry really turn around.
I should try to see if I can reduce the gap in negotiations but I truly believe that it is more important to be on a favorable environment and the salary situation should resolve over time, I think.
needhelp Wrote: ------------------------------------------------------- > Wow! Its like you took words from my hand. I am in > a very similar position. The difference is that I > think the cmpensation would be ok but cost of > living would set me back. I want to get the new > job because it would look good on my resume. > ANother issue I have is that the potential > employer indicated they are looking for at least a > 2-year commitment. I wonder what that means? It > could mean signing a contract that says I will > have to give back bonuses etc if i leave before 2 > years. I’ve never heard of any shop that makes you sign an agreement outside of maybe the highest ranks. I just took a job at a hedge fund and the manager asked for a 4 year commitment. We talked about it, and his point was that it’s going take me a year to learn his system, and I’m not going to be extremely useful to him in the first twelve months. So he doesn’t want to invest the time and have someone leave after the typical two year Wall St. term. He wants to see the investment pay off. I think it really depends on the shop. If they are seriously considering you and you are seriously considering them, there’s no reason you can’t ask some more questions about it.
I think you have to tell them that you love the idea of the job and working for them, but the compensation disparity is enormous plus the two year commitment. One or the other (preferably both) needs to be changed. You probably won’t be able to close the gap entirely, but you ought to be able to reduce it. If they know that staying at your current job is not an option, then you may be screwed.
bromion, thanks for the input. bchad, the 2-year thing was my situation. JTLD, my apologies for throwing my scenario in here. i will stop now.
If staying at your curent job is not an option, then I’d leave and take the haircut.
JohnThainsLimoDriver Wrote: ------------------------------------------------------- > I’m not sure why the comp is so low but I suspect > it’s a combination of > > a) the prestige of the firm makes them able to pay > less and still attract talent > b) not in New York (although within commuting > distance) > c) in my firm I’m the only person who can do my > job, while in their firm they have dozens of > people who can do my job > d) probably a lot of people out there who would > work for even less than what they are offering > right now > e) they specialize more in consulting than in > actual investing, ie. if a pension or endowment > needed investment advice they would come to these > guys. I think their consulting fees (flat rate) > dominate their hedge fund fees (2/20). > > I’m not necessarily miserable at my current job > but I am not very confident my job (or firm) will > exist by the end of the year unless asset flows in > the hedge fund industry really turn around. If you think your shop is going to fold, then it’s better to take a job at a secure firm, even at a lower pay rate. I say this for two reasons. Reason one is that people who are getting experience right now in what has to be considered the worst economic environment in decades will be worth a premium down the road in our industry. If you lose your job because your firm folds, you don’t fit into this group. Reason two is that I don’t think it’s safe to assume that a lot of new opportunities are going to open up later this year or even early next year. If you read the news and analyst reports and you would think that Obama and Co. are going to snap their fingers and make everything better ASAP. I think that’s mostly media hype, and I wouldn’t personally count on that happening. So if you’re considering the strategy of, “I’ll wait it out here and see if something better comes along,” I would think long and hard about that, since it potentially means you have no downside support if you’re wrong. Also, you need to weigh the benefits this firm will have for your career. If having worked there is going to give you a lot of future option value, then the comp may not be that important in the short-term. In the long run, over the course of your career, if you get where you want/need to be, then whatever amount of money you gave up for a couple of years isn’t going to matter that much. You could always take the job, work there for a couple of years, and then move on to something higher up with much better pay. So I would focus more on the long-term career picture than the short-term compensaion. And if you do that, definitely save some sort of proof of what you are currently making for future salary negotiations so you don’t get low balled based on the low comp you would be getting at this shop.
This might be a sales tactic on the employer’s part, they might be trying to see what they can get on the cheap given the tough economy etc. How did you find out about the compensation? Was it straight from the horse’s mouth or through the grapevine? I wouldn’t take myself out of the running for the position, I’d let them make you an offer and then try to negotiate something if you’re not happy with the offer.
I think bromion has hit the nail on the head. A stable job at a good company is important in this economy, if you think you might get the ax later this year. Assuming you can find a way to cut your expenses and live within the salary they are offering, I would take it.
JohnThainsLimoDriver Wrote: ------------------------------------------------------- > and b) > you have to put up with that income for several > years before you can jump to another firm so that > you don’t look like a job hopper. I’m surprised that this is a concern of yours - in this job market, the majority of people are hopping jobs (voluntarily or involuntarily). I think that if you took the safer job and then kept looking, people wouldn’t see two job switches in 2009 as your decision; it would be viewed as an artifact of the volatile environment. If ever asked, you would simply explain that you left your current job because the place was falling apart and the other job you were forced to take ended up not living up to your expectations. With that in mind, I would seriously consider jumping ship and then keep looking. If things don’t materially improve in the next year or two then the brand equity of the new firm will be a huge asset for you.
If your current position isn’t that secure, then go ahead and look around. That said, a 50 percent haircut to current salary is very severe and I would personally be offended by such a proposal. I don’t care how well known the firm is, and if you’ve been in the industry for at least a little while, you really ought to know that most other people don’t care about that either. In addition, the reason that firm can give you such a low offer is either because they don’t think you can do better than what they offer you, or they believe that there is a lot of other talent out there that can be just as competent as that job as you. In either case, you ought to think about how competitive it will be to work at that type of place. Sounds like you’d have your work cut out for you there on top of the major pay cut.
BTW, how long have you been working in finance? My advice to you was predicated on the assumption that you’d been in the industry for at least a few years, in which case you know how severe of a move it would be to take such a huge paycut. There is little to no upside in doing that because your future jobs will look at what you’ve made previously as a barometer for what to pay you in the future. That said, if you’re really concerned about the perception of “job hoppinh” and the “learning experience,” then is it true that you’ve only been in the field for a couple years? If so, it might be more OK to take the paycut since you are not experienced. I know I’d probably feel more inclined to do so a couple years ago when I was at an earlier point in my career, but I’d have to be crazy to do that now. Even last year, I had an offer from a PE shop (not the one I currently work for) that offered me 20 percent less than what I’d been making as a senior research associate. I told them I would not accept the offer unless they paid me at least 15 percent more than my current salary, because otherwise I wouldn’t leave my firm. They eventually gave me what I asked for. I felt it would have been a rookie mistake to comply to the lower pay, but then again the job market back then was better and I also had other offers to leverage with (yet another reason why you should keep looking).
I’ve been with my current firm for 5 years and in the business for several more prior to that. This new employer started discussing comp with me after they expressed an interest in hiring me. Basically they said “we know how much you make and we need to let you know sooner rather than later that what we can offer will be about half of what you’re making now.” They said that is basically the standard comp for everyone at my level in their firm. The other issue I have with low compensation is that when I look for the next job after that, my future compensation is most likely going to be based off of what I would be making at this place, which would probably still be lower than industry average several years from now. My ultimate concern is that accepting such a low compensation now would have a permanent ripple effect on my career.
I would say that it is never an option to accept a pay cut, at least when it is up to you to decide.
It could be that the bonus at the new firm averages much higher than your last position. If you got a 20% bonus at your last job and can expect a 140% bonus at this job, they would be equal.
Total compensation already includes bonuses. That’s why I said “compensation” and not “salary.”